As technology becomes a commodity, domain expertise is the only aspect that can give an edge to independentsoftware vendors in India. i-flex solutions has built its domain expertise in the banking space and its flagship product Flexcube is world recognised for its core banking solutions. The increase of services revenues by almost 54% on YoY basis for this quarter is considered to be a big positive as the company has predominantly concentrated on products. The present acquisition is the right step in the evolution of software business in India as the days of labour arbitrage and commodity programming are getting numbered. Indian companies are moving up the value chain by providing more and more value added solutions and that is why global technology giants are getting attracted to the niche expertise that they are building.
Again, the world is moving towards off-the-shelf software where big technology companies will need to have domain expertise to build customised solutions for different types of industries. i-flex is one Indian company that has concentrated more on its product than services. Product revenues are very non-linear in nature. Any company with a product that sells is going to attract global technology giants because of the synergies they provide.
As Indian companies become global consultants, there will be only few who will survive. These are the ones who have recognised their key areas of functional expertise. Companies that are still operating in the service areas and are dependent on labour arbitrage may find themselves dying slowly. For the Tier I companies ,it is just the beginning.